Twenty Years Ago

Twenty years ago, on October 19, 1987, the day that would soon become known as “Black Monday,” the Dow Jones Industrial Average (DJIA)plunged 508 points––or 22.61%. By any measure, it was the worst single day in U.S. stock market history.

Of course, the markets eventually bounced back, building ever-increasing strength over the 1990s and hitting a fever pitch before the dot-com bubble burst in the spring of 2000. What followed was a disastrous bear market, in which investors experienced three years of consecutive, double-digit losses. At the time, a common joke was to say that your 401(k) had shriveled into a 201(k).

But the numbers help put things into perspective: The DJIA today trades above 13000. On the day of the crash in 1987, the Dow opened at 2246. Just imagine the gains you would have forfeited had you given up on stocks back in 1987.

The stock market is a mighty resilient beast. Remember September 11, 2001? The Dow lost 7.7% when it reopened on September 17. Six months later, it was up 10.47%. The day President Kennedy was shot, the Dow fell nearly 3%. Six months later, it had rebounded by 15.37%. The Cuban missile crisis in 1962…the North Korean invasion of South Korea in 1950…the Japanese attack on Pearl Harbor in 1941. All these incidents brought immediate havoc to the market. And yet the market came back every time.